Commodities markets rise in anticipation of interest rate decisions
The week ends with gains for precious metals, except palladium
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Commodities markets maintained their positive momentum last week before top central banks announced their interest rate decisions.
The US Fed, the European Central Bank, and the Bank of Japan are all expected to reveal their interest rate decisions this week, which are the main focus of the markets.
The likelihood that the Fed will keep interest rates unchanged was one of the key factors for the commodities markets’ gains.
News that China is urging public banks to lower deposit rates and hopes that the People’s Bank of China may cut some lending interest rates this month also supported the upward trend.
Precious metals prices increased last week, except for palladium. Gold rose 0.7%, silver 2.8%, and platinum 0.3%, while palladium plunged 7.1% to its lowest level since May 2019. Palladium’s price fell on fears of a global surplus.
Base metals showed mixed performance. Copper finished the week with a 1.2% increase, while lead rose 1.7% and zinc 3.6%, but aluminum dropped 2.5% and nickel 1.6%.
Brent oil price declined 1.7% while natural gas surged 4.1%. Despite supply worries that emerged after Saudi Arabia announced the biggest production cut in recent years, ongoing global economic uncertainties played a major role in Brent oil price’s fall.
Natural gas prices soared as US electricity providers’ demand increased due to higher air conditioning usage.
Agricultural commodities also saw an upward trend last week.
Wheat gained 1.8%, soybeans 2.6%, and rice 7.5%, while corn dropped 0.7%.
Cotton slipped 0.1%, while coffee rose 3.5% and sugar climbed 1.5%.
Cocoa, reaching its highest level since June 2016, ended the week with a 4.9% increase.
Wheat prices soared after Ukraine said a huge dam was hit by Russian forces, causing a flood that threatened grain supplies.
Prospects for Australia’s wheat and barley production to fall by a third next year, and growing concerns over production as heavy rains in China damaged wheat, also led to a rise in wheat prices.
Decreased demand expectations due to increased corn planting in the US and falling oil prices pushed down corn prices.
With the decline in coffee exports from Vietnam in January-May, coffee supply shortages emerged and coffee prices jumped.
With the onset of monsoon rains in India, concerns over production caused a climb in sugar prices, while sugar cane planting was delayed.
This situation also led to sugar supply concerns.
Concerns that monsoon conditions could harm production also caused cocoa prices to soar.
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